Alcoa (AA) AI Stock Analysis

• Market Cap: $7.67B
• Dividend Yield: 1.36%
• Average Volume (3M): 6.15M
• Price to Earnings (P/E): 7.6
• Beta (1Y): 1.86
• Revenue Growth: 21.32%
• EPS Growth: N/A
• Country: US
• Employees: 13,900
• Sector: Basic Materials
• Sector Strength: 55
• Industry: Aluminum
• EPS (TTM): 0.39
• Shares Outstanding: 258,914,730
• 10 Day Avg. Volume: 5,537,260
• 30 Day Avg. Volume: 6,152,550
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: 0.68
• Enterprise Value/Gross Profit: 3.39
• Enterprise Value/Ebitda: 4.12
• 1Y Price Target: $33.50
• Price Target Upside: 14.22% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8

• Rating: 67 Neutral
• Price Target: $32.00 ▲(9.10% Upside)

Alcoa's overall stock score reflects strong financial performance and valuation metrics, offset by technical indicators suggesting potential short-term weakness. The earnings call highlighted both strategic successes and significant challenges, impacting the short-term outlook. The company's ability to manage cash flow and navigate tariff-related costs will be crucial for sustaining long-term growth.

Positive Factors

Financial Performance

Alcoa delivered slightly better-than-expected results, despite a challenging operating environment.

Operational Efficiency

Management is focused on improving efficiencies, cutting costs, and simplifying the portfolio, which is anticipated to improve the capital structure.

Tax Incentives

The company will be receiving IRA production tax credits for aluminum production in the US of approximately $50-60 million per year.

Negative Factors

Market Volatility

Uncertainty amid abnormal volatility in alumina prices and the negative impact of new US tariff policy on aluminum.

Operational Challenges

The restart process at San Ciprián smelter will result in a 150kt reduction to aluminum shipments.

Tariffs and Trade Policies

Higher 50% Section 232 tariffs were the focus of the call, with the company taking an incremental $95 million hit during the quarter.

Alcoa Business Overview & Revenue Model

Company Description

Alcoa Corporation (NYSE: AA) is a global leader in the production of aluminum, operating across the entire aluminum value chain from mining and refining bauxite to manufacturing and recycling aluminum products. The company is primarily involved in the production of aluminum and alumina, with operations spanning several regions worldwide, including North America, South America, Europe, and Australia. Alcoa operates in various sectors such as aerospace, automotive, building and construction, commercial transportation, and packaging, providing a range of products including rolled and extruded aluminum, as well as engineered products and solutions.

How the Company Makes Money

Alcoa generates revenue primarily through the sale of aluminum and alumina, with its revenue model primarily based on the production and distribution of these core products. Key revenue streams include the sale of primary aluminum, alumina, and fabricated aluminum products, as well as aluminum recycling services. The company benefits from long-term contracts with major customers in the aerospace and automotive industries, which provide stable revenue sources. Additionally, Alcoa's operational efficiency and focus on cost management contribute to its profitability. The company also engages in strategic partnerships and joint ventures that enhance its market reach and operational capabilities, further contributing to its earnings.

Alcoa Financial Statement Overview

Summary

Alcoa demonstrates strong revenue growth and operational efficiency improvements, resulting in better profitability metrics. The balance sheet is strengthened by lower leverage and improved equity returns. However, cash flow management poses a challenge with negative free cash flow growth. Overall, Alcoa is on a positive trajectory but needs to address cash flow issues to sustain long-term growth.

Income Statement

Alcoa shows a strong revenue growth with a 7.9% increase in TTM compared to the previous year. The gross profit margin improved significantly to 39.7% TTM. However, net profit margin remains low at 6.8% TTM, albeit an improvement from the previous year. EBIT and EBITDA margins have both improved to 33.5% and 16.9% TTM respectively, indicating better operational efficiency.

Balance Sheet

Alcoa's balance sheet reflects a robust equity position, with an equity ratio of 39.9% TTM. The debt-to-equity ratio has improved significantly to 0.01 TTM, indicating lower leverage. Return on equity has improved to 14.8% TTM, showing better profitability. However, the high total liabilities pose a risk to financial stability.

Cash Flow

Operating cash flow has increased by 47.9% TTM, showing strong cash generation. However, free cash flow growth is negative, declining by 17.1% TTM, highlighting concerns over capital expenditures. The operating cash flow to net income ratio is 1.07, indicating efficient cash conversion, but free cash flow to net income ratio remains low at 0.40.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	12.78B	11.89B	10.55B	12.45B	12.15B	9.29B
Gross Profit	2.58B	1.85B	738.00M	2.24B	3.00B	1.32B
EBITDA	2.12B	1.09B	48.00M	1.32B	1.86B	826.00M
Net Income	1.00B	60.00M	-651.00M	-123.00M	429.00M	-170.00M
Balance Sheet
Total Assets	14.99B	14.06B	14.15B	14.76B	15.03B	14.86B
Cash, Cash Equivalents and Short-Term Investments	1.51B	1.14B	944.00M	1.36B	1.81B	1.61B
Total Debt	2.65B	2.82B	1.97B	1.87B	1.87B	2.62B
Total Liabilities	8.76B	8.91B	8.31B	8.17B	8.74B	9.84B
Stockholders Equity	6.13B	5.16B	4.25B	5.08B	4.67B	3.31B
Cash Flow
Free Cash Flow	225.00M	42.00M	-440.00M	342.00M	530.00M	41.00M
Operating Cash Flow	633.00M	622.00M	91.00M	822.00M	920.00M	394.00M
Investing Cash Flow	-500.00M	-608.00M	-585.00M	-495.00M	565.00M	-167.00M
Financing Cash Flow	-336.00M	201.00M	57.00M	-768.00M	-1.16B	514.00M

Alcoa Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 29.33
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AA, the sentiment is Negative. The current price of 29.33 is below the 20-day moving average (MA) of 30.17, below the 50-day MA of 29.81, and below the 200-day MA of 32.94, indicating a bearish trend. The MACD of 0.09 indicates Positive momentum. The RSI at 45.47 is Neutral, neither overbought nor oversold. The STOCH value of 19.99 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AA.

Alcoa Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
USLM	77 Outperform	$3.39B	27.17	24.95%	0.19%	21.97%	44.87%
AA	67 Neutral	$7.67B	7.60	20.01%	1.36%	21.32%	―
CSTM	67 Neutral	$1.97B	76.03	3.02%	―	2.52%	-83.35%
CENX	66 Neutral	$2.08B	19.74	17.74%	―	15.39%	-47.91%
KALU	65 Neutral	$1.20B	19.12	8.89%	4.11%	4.62%	56.04%
CLF	54 Neutral	$5.23B	―	-25.79%	―	-12.14%	-4329.00%
Sector *	43 Neutral	C$908.59M	-8.58	-0.02%	2.69%	23.40%	-43.40%

Alcoa Corporate Events

Alcoa Sells Stake in Ma’aden Joint Venture

On July 1, 2025, Alcoa Corporation announced the closing of its sale of a 25.1% ownership interest in the Ma’aden joint venture to Saudi Arabian Mining Company, receiving approximately $1.35 billion in shares and cash. This transaction allows Alcoa to record a gain of approximately $780 million in the third quarter of 2025 and reflects the company’s strategy to unlock shareholder value while maintaining a stake in Ma’aden for future financial visibility.